In Florida, when the mortgage balance is more than the sales price of a home in foreclosure, there is a “deficiency” – stated another way – the deficiency is the amount due the lender when the sale proceeds in a short sale are not enough to pay the loan balance.

That “deficiency” can be the basis for further litigation by the lender against the borrower, and for many years home owners, those who were already dealing with the loss of their property to foreclosure, had to deal with the real possibility that the bank wasn’t done with him or her.

In fact, many Florida families were shocked to find that years later, after dealing with the financial crisis of foreclosure as well as the emotional burdens that foreclosure places on every family member, the story wasn’t finished. Lenders had up to FIVE years to try and get that deficiency balance — and a Florida borrower might well have years literally pass before the deficiency claim was demanded by the bank.

We’ve posted on what deficiency claims can do to Florida home owners, for further information see:

Florida Deficiency Statute Changed in HB 87: The Five Year Window Is Gone

When Florida Governor Rick Scott signed the Florida Foreclosure Reform bill into law, many were (and are) of the opinion that the law is unconstitutional and that the courts will find it to be in violation of state and federal constitutional protections against ex post facto (retroactive application) laws.

Today, and for the foreseeable future, however, this is a new, valid, recognized statute on the Florida books. Which means that banks must abide by it, just like home owners.

95.11 Limitations other than for the recovery of real property.—Actions other than for recovery of real property shall be commenced as follows:

(2) WITHIN FIVE YEARS.—

(b) A legal or equitable action on a contract, obligation, or liability founded on a written instrument, except for an action to enforce a claim against a payment bond, which shall be governed by the applicable provisions of paragraph (5)(e), s. 255.05(10), s. 337.18(1), or s. 713.23(1)(e), and except for an action for a deficiency judgment governed by paragraph (5)(h).

(5) WITHIN ONE YEAR.—

(h) An action to enforce a claim of a deficiency related to a note secured by a mortgage against a residential property that is a one-family to four-familydwelling unit. The limitations period shall commence on the day after the certificate is issued by the clerk of court or the day after the mortgagee accepts a deed in lieu of foreclosure.

Section 2. The amendments made by this act to s. 95.11, Florida Statutes, apply to any action commenced on or after July 1, 2013, regardless of when the cause of action accrued. However, any action that would not have been barred under s. 95.11(2)(b), Florida Statutes 2012, before the effective date of this act must be commenced within 5 years after the action accrued or by July 1, 2014, whichever occurs first.

One Year Statute of Limitations on Deficiency Judgments in Florida

What this means is that banks and mortgage lenders in Florida now have much less time to go after borrowers for any amount left due and owing on the home loan if the sale of the foreclosure property does not cover the balance due on the home loan.

The new Foreclosure Reform law (HB 87) changes the Florida Statutes so now the Florida statute of limitations period for a mortgage lender to enforce a deficiency judgment that the bank has obtained as part of the foreclosure lawsuit is down from 5 years to 1 year. However, this only applies to certain foreclosures:

A good piece of advice if you are faced with a deficiency action is to at least speak with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

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20 Comments

erika on June 27, 2013 at 12:39 am

Our home was foreclosed on today, June 26, 2013. It is my husband, myself and our 3 children who live here. Would this new law apply to us? I am just sick with worry that the bank could come after us up to 5 years.

Larry Curvin on July 2, 2013 at 7:38 am

How does foreclosure work when the lender cannot produce the original loan documents work out on commercial property owned by an individual?

Matt on August 22, 2013 at 9:36 am

The language in the statute – “the day after the certificate is issued by the clerk of court ” – is that referring to the certificate that is issued as a result of the foreclosure sale?

Liz on August 27, 2013 at 11:11 am

When it says “the day after the certificate is issued by the clerk of court” they mean the Certificate of Title right??

This is issued by the clerk AFTER the foreclosure has gone to auction, correct?? I hear that it’s usually around 10 days later?

Hi does this law apply to deficiency’s held by a short sale approval? I have a second bank that is approving the short sale but not waiving the deficiency even though the first is. Thanks! Kate

Nancy on May 24, 2014 at 10:18 am

If the bank files a deficiency judgement against two co borrowers not married or related do they file on both the entire amount of half of deficiency? If one dies and judgement is paid off does bank have to remove from remaining spouse?

Am I not protected under the new statute of limitations? The case is still in “pending” status. How long can it stay like that?

RC on June 24, 2014 at 10:23 pm

“… the effective date of this act must be commenced within 5 years after the action accrued or by July 1, 2014, whichever occurs first.”

Since were down to the wire now, can you be sued on July 1 or does it have to be before then? (June 30th) How do courts look at the “by” in “by July 1”? – thanks for the great blog.

linda pari on June 25, 2014 at 10:14 am

shortsale 8/2011 release without prejudicie — what is the statute of limitaions?]

one family residence

richard finamore on July 5, 2014 at 10:46 pm

…foreclosed on in Jan 2011 for an owner occupied commercial building in Vero Beach, Fl.

Fran on July 10, 2014 at 1:16 pm

Thanks for your post on Florida Deficiency Foreclosure Claims. Here’s a question for your blog. Does the new law pertain to Condo Associations which foreclosed due to unpaid fees and assessments? Lots of condo owners have been foreclosed on by the COA which then takes title and rents and/or sells subject to the mortgage. How long does the COA have to pursue a deficiency judgment after it forecloses? Keep up the good work!

Diane on July 12, 2014 at 12:52 pm

Does this new 1 year statute refer to both first and second mortgages from the same lender, or can we still be sued for the second loan?

Thom Vice on July 23, 2014 at 4:27 pm

foreclosure action in court is now closed. is the 1 year to file a DJ by BOA from that date or the date of the actual auction?

thanks

Kari Stehmeyer on August 14, 2014 at 10:02 am

Does your firm negotiate settlement on deficiency judgments when the property is located in Northern Florida? Or do you only represent clients in Southern Florida? We are interested in discussing our particular matter with your firm, but we now live in California, and the property in question is in St. Johns County.

jill on December 18, 2014 at 11:43 am

Does this new law affect short sale deficiencies as well? It seems rather unfair that one would make every effort to short sale a property and the lenders have more time to persue than had someone foreclosed property.

Jill on April 1, 2015 at 11:41 am

Does this new law affect short sale deficiencies as well? It seems rather unfair that one would make every effort to short sale a property and the lenders have more time to persue than had someone foreclosed property.

Victor on June 4, 2015 at 11:00 am

Hello Larry,

In the case a Condominium Association has foreclosed on the property in 2012, and then, at a later date …. what happens to deficiency? Did the Statute of Limitation start at the first (Condo Assn.) foreclosure … [personal details removed for your privacy and protection]

Thanks,

Victor

Jay on August 20, 2015 at 6:18 pm

I had a first and second mortgage that went delinquent almost 8 years ago. ….

Sheila on August 27, 2015 at 9:33 am

Hi I underwent a foreclosure in 8/13…..

Byron on March 21, 2016 at 9:41 am

Hi, if I am reading this correctly, the new deficiency statute of limitations would NOT apply to vacant land. Is that correct? Thanks!

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These articles are for informational purposes only and should not be relied upon as legal advice. Florida law is constantly changing. Therefore, we strongly recommend talking with a Florida real estate lawyer to learn your rights.